On 26 October 2015 the FCA published a speech given by Mary Starks, the FCA’s Director of Competition, at an OECD meeting in Paris.
Ms. Starks provides an overview of the Financial Technology sector (Fintech) and notes that the FCA has a competition mandate which requires it to stand in the shoes of new entrants and challengers. She states that one of the ways that it has sought to execute this mandate is by launching Project Innovate and within that establishing an Innovation Hub, geared towards working with innovative businesses.
Ms. Starks noted that Fintech firms often struggle with how to start a conversation with the regulator and states that Innovation Hub is designed to provide direct support to innovative firms with business models that may not fit easily into the regulatory regime designed around the last generation of financial services firms. Innovation Hub can advise individual firms on navigating the regulatory framework and take soundings about which aspects of it that may need to be reviewed by the firm. Ms. Starks noted that of the 144 firms that have been supported by the Hub to date, the FCA has given 51 ‘informal steers’ and explains the difference between ‘informative steers’ and ‘individual guidance’, the former being relied on at the firm’s risk.
The Innovation Hub is also exploring the feasibility of a “regulatory ‘sandbox – a safe space in which businesses, new entrants and established players alike can experiment with innovative products, services, business models and delivery channels without immediately incurring all the normal regulatory consequences”. The results of the feasibility study are to be reported to the Government this autumn.
Finally Ms. Starks calls to our attention six themes that are emerging in Fintech innovation:
• Cheaper models
• Technology changing the role of human experts
• New markets and functions, and serving previously under-served customers
• Easier payments
• Regulatory tech and ‘bank in a box’
• Big Data
To view Ms. Starks’ speech in full click here.
At Objectivus we strongly support technical innovation and have worked with a number of Fintech start-ups and early stage companies to navigate the regulatory framework, including assisting them in their engagement with the FCA’s Innovation Hub. Our goal is to get our clients’ concepts and products to market as quickly and painlessly as possible.
We very much look forward to reading the results of the feasibility study on the ‘regulatory sandbox’ which could pave the way for easier development and testing of innovative Fintech solutions.
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